Custom NPCs are meant for RP only. They spawn out of nowhere for CPs - I don't even know what their starting stats are, but I think they start off with unspent SP, and you can pick the race, which theoretically means you could make a full squad of BestRace custom Riflemen spawn wherever you are instead of having to go hire more through a barracks or whatever.

When they were introduced the intention was that they wouldn't participate in combat. However they could as any NPC could participate. However looks like Kendall has brought it back to what it was supposed to be. Cue angry people I suppose even though they have been warned in the past.

All 100x100 images must have a 100% intact Combine frame.
Images must be in JPG, GIF or PNG format.
All images must have a solid black background.
No pixely or blurry images will be accepted.
No animated images of any sort.
Text on entities must be in good taste and real life symbols are generally a no.
Entities from other universes are unacceptable.
All NPC images must represent the correct race.
All offensive material will be rejected.
All images must be photo-realistic. No drawings or manga/anime images.